Airlines Revenue Recognition Task Force

AICPA Revenue Recognition Task Forces are charged with developing revenue recognition implementation issues that will provide helpful hints and illustrative examples for how to apply the new Revenue Recognition Standard.

Revenue recognition implementation issues identified by the Airlines Revenue Recognition Task Force, when available, will be posted here. Full revenue recognition implementation issues will be posted below for informal comments after review by the AICPA Financial Reporting Executive Committee (FinREC).

Issue #

Description of Implementation Issue

Status

1

Regional contracts

2

Joint venture revenue sharing agreements

3

Passenger tickets – Breakage

This implementation issue will discuss the recognition of revenue for passenger ticket breakage (which consists of tickets for which the passenger is not expected to exercise their rights under the ticket contract with the airline and, as a result, the ticket will expire unused) and accounting and breakage considerations related to travel vouchers.<.blockquote>

Submitted to AICPA RRWG

4

Ancillary services

This implementation issue will discuss considerations for applying the guidance in FASB ASC 606 to ancillary services and related fees charged by airlines.

Submitted to AICPA RRWG

5

Interline transactions

This implementation issue will discuss considerations for applying the guidance in FASB ASC 606, including classification under principal vs. agent for arrangements that airlines have amongst each other to sell tickets under which one or more segments of the journey will be flown by another carrier.

Determination of whether loyalty status constitutes a separate
deliverable (in addition to flight and other loyalty components in a
ticket or other transactions)

This implementation issue will discuss a framework for the assessment of whether “Tier Status” in an affinity program conveys a material right to goods and services and therefore gives rise to a separate performance obligation.
This issue was developed jointly with the Gaming and Hospitality Task Forces.

Out for Exposure until February 1, 2017

6e.

Inclusion of profit sharing in co-brand valuation

6f.

Financing on advance mile purchases

This
implementation issue discusses whether miles accumulated in customer
loyalty accounts and advance purchases of miles by financial
institutions, in which the airline receives time value benefit, have a
significant financing component.

This
implementation issue provides considerations for determining whether
typical costs incurred in obtaining a ticket qualify for capitalization
and, if so, over what would be the appropriate amortization period.

Out for Exposure until September 1, 2016

9

Maintenance power-by-the-hour services

10

Accounting for Passenger Taxes & Related Fees

This implementation issue will discuss if taxes and related fees charged by government and airport authorities required to be collected and remitted by the airline should be recorded on a gross or net basis?

Out for Exposure until September 1, 2016

11

Change Fees

This implementation issue provides
considerations for applying the guidance in ASC 606 to airline change
fees, and whether changes made to an existing itinerary qualify as a
distinct service, what would be the appropriate revenue classification,
and if there are any unique disclosures to be made.

Submitted to FinREC - November 2015

12

Disclosures

13

Ticket Level Performance Obligations

14

Transition

FEEDBACK REQUESTED

Draft Revenue Recognition Implementation Issues included for informal comment, when available, will be listed below.

Respondents should submit any comments including the implementation issue number to ymishkevich@aicpa.org by the dates noted below: